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Citigroup fails to syndicate Â£2.5bn EMI loan

Citigroup has been unable to syndicate any of the Â£2.5bn (â‚¬3.5bn) loan it made to Terra Firma in the summer for the private equity group's leveraged takeover of struggling music company EMI.

The US bank, which is reeling from a billion dollar write-down from the sub-prime crisis, reluctantly signed the deal in August as the credit crisis unfolded. But the continuing risk aversion among nervous investors has left it sitting with the entire loan still on its books.

Bankers warned that Citigroup faces a further hit if Terra Firma chief Guy Hands' turnaround plans for the company fail to deliver. The loan's value has fallen Â£200m. Hands is conducting a strategic review which is expected to lead to severe cost cuts.

Terra Firma is understood to have sold more than Â£100m of its equity investment in EMI to co-investors in Terra Firma funds.